Digital Transformation News

Modernizing Commerce Platforms for Tomorrow: A Digital Deluge

Mohit-Gupta-Justin-Honaman

Transforming direct-to-consumer channels and leveraging digital solutions to raise competitiveness in Retail and Consumer Packaged Goods

Justin Honaman, Head, Worldwide Consumer Products & Retail – Go To Market at AMAZON, and Mohit Gupta, Senior Industry Principal, Consumer Services at HCL Technologies, talk through the disruptions underpinning the CPG and retail landscape and share their take on the commerce platform modernization for tomorrow’s digital buyers.

Mohit: Hi Justin, what do you see happening in the e-Commerce industry space to help businesses in the CPG industry innovate faster and get more competitive at what they do?

Justin: As we have all observed, the last two to three years have been characterized by a forced digital acceleration in retail. Our customers were focused on modernizing eCommerce platforms and launching direct-to-consumer channels. You know, retail was the fast leader whereas CPG was a fast follower – but this year, we are seeing the locus of transformation shifting to digital manufacturing, supply chain, procurement, connected factories, Industry 4.0 capabilities, and so on.

Mohit: Definitely, we have seen this shift quite equicocally – and this year, especially the CPG players, are observing considerable time, observing shifting consumer behaviors and knowing their customers better. I had a chance to visit the Amazon 4-star in the New Jersey area, and I was amazed to see the degree of product awareness at play there – I saw so many products from companies that I assume were born digital. I think that many companies need to catch up to these players in the years to come.

Justin: Yeah. I think that retail is actually helping drive some of the transformations in consumer products, at least in the food and beverage (F&B) space. I also have some stats that I’d like to share – these come from IHL. So during the pandemic, $500bn was the cost of out-of-stock products – and 25% of that was from known causes, but 15% was from newly exposed issues in the supply chain between CPG manufacturers, F&B companies, and the retailers. And this one I find particularly interesting – the number of dark stores and fulfillment centers has gone up by 1000% over the last two years on the retail side.

And these changes are receding back upstream as CPG players are trying to react to what retailers are doing. Some of the pain points in the CPG industry persist – for example, supply chain visibility and demand forecasting. You know, when I was working at Coca-Cola, our forecasting accuracy with some suppliers was near 60%. However, some new technologies enable better demand forecasting – like analytics and disaggregated data. However, we did a study recently, and we found that 66% of CPG brands have their channel strategy figured out, and only 22% are still exploring that area – and I’m sure that you’re seeing the same.

Mohit: You’re right. We are definitely seeing CPG players report what percentage of their sales will happen online – and there’s a clear prioritization of eCommerce, which is a big shift in the way they want to market their products and their product life cycles. From my recent work at a health and hygiene company, I observed that the number of places where interactions with the customers happen had gone up – and making that journey frictionless is the name of the game.

Justin: No doubt. And that’s where we get a lot of technical questions – like, what’s the priority of modernization? How do we transform our business and the technology that underpins it? So these questions are basically unfolding in the form of tension between business and IT – and this is the case with legacy brands rather than digital natives, which can add personalization with customer data platforms to their strategic advantage.

Mohit: So if we break down the value chain Justin, there’s a lot of change that CPGs have to adapt to, beyond the 3 M’s – or the make-move-market paradigm. I was recently asked what personalization means to you – as a retailer or as a CPG brand. What, in your opinion, is the industry standard, the baseline, and above average?

Justin: So what we have been seeing is that cloud is great and necessary – and then we need business capabilities, and we need agility, scalability, and cost savings across global operations. That’s why the CPG industry is moving to the cloud. But that’s just the story of the back office. Let’s take a look at some of the solutions across the 3Ms that we have dialed into because of what our customers have asked for. So in the make section, we have OEE, we have connected factories, and we have facility-level analytics and visibility. Then, in the supply chain, we have capabilities to enable visibility and better decisioning – a control tower to use the buzz phrase.

Another interesting area is on-shelf or in-store availability. Our customers are a lot more interested in image-recognition capabilities in-store to empower optimal product placement, trade promotion execution, and so on. And then we move on to the 3rd M – that is, market. Again, there are some great solutions that integrate seamlessly with AWS – like Magneto and VTEX, which can enable a true CDP for businesses. And over the last few months, our customers have also shown interest in contact center and service capabilities.

Mohit: Absolutely, we have seen tremendous interest in digital manufacturing, connected factories, asset management solutions, and so on. And to take your point further, I think that the kind of personalization that we are talking about is only possible through a truly connected ecosystem that can reach down to the shop floor.

Justin: Definitely – and the fourth area that we haven’t spent much time on as yet, is measurement, metrics, and analytics. And one of the key pain points in the industry is about a singular view of operational performance – from retailer-to-distributor-to-customer – how do you roll that and get the right view of daily sales – right? And then, what about the retailer sales data coming back to you – how do you harmonize that data? And that’s a question to which there’s no single turnkey solution for years. Then we’ve got consumer data from D2C – how do I make sense of it with the rest of the data? So, in other words, the analytics space has exploded, and there’s a significant positive change.

Mohit: Yeah, data is definitely going to remain a key focus for years to come amidst changing priorities. And I have kept following what Amazon has been doing in this space.

Justin: Absolutely. And you know, through the course of this conversation, we have thrown around so many concepts that it can be overwhelming from a CPG executive’s perspective – and there’s definitely a place for guidance here, and partners that can help them out will definitely be critical in making wise investments. While performing critical migrations may take time, there are innovations that you can take up in areas like personalization, your production facilities, supply chain, and so on – and these are things that you can test out very quickly and learn to make better decisions on investments.

Mohit: Yeah, I think there’s a lot of opportunity areas for retailers and CPG brands – and honestly, we have a lot of brands that are now willing to partner with Amazon and see significant ROI as a result.  And overall, I think that this is an exciting time to be doing business in this industry.

About the speakers:

1. Mohit Gupta

Senior Industry Principal – Consumer Services

HCL Technologies

Mohit Gupta is CXO’s Partner for Transformation & Innovation. He is Certified SAFe® Agilist and helps enterprises move at start-up speeds with agility business demands. He has extensive experience in consulting with CXOs in F500 – B2B and B2C Businesses. He plays a Change Agent for redefining global IT services strategy & next gen/future operating models, Transformation Roadmaps – captives, ITO, M&A, near shore set ups, and JVs. He focuses on Enhancing Customer Value with Modern Application Development Practices (Agile/DevOps), Creating Operating Models that fuel Digital Transformation, Accelerate Innovation, & Efficient Operations through Automation.

He can be reached at https://www.linkedin.com/in/mohit-gupta-a62403/

2. Justin Honaman

Global Head and Worldwide Go-To-Market Leader

AMAZON

Justin Honaman leads the worldwide Consumer Products – Food & Beverage organization for Amazon Web Services. His team’s focus within Consumer Products is on delivering supply chain, ecommerce, data / analytics and digital engagement business solutions for CPG customers globally. Justin has spent the majority of his career in Consumer Goods and Retail both on the customer side (Coca-Cola, Georgia Pacific) as well as the technology / consulting side (Accenture, Teradata). Justin lives in Atlanta, Georgia.

He can be reached at https://www.linkedin.com/in/justinhonaman/

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